Court Stops Marketers from Illegally Debiting Consumers' Accounts

A U.S. district court has stopped a group of marketers in California and Nevada from conducting business using "free" trial offers and making health claims that the Federal Trade Commission believes are deceptive and illegal.

The defendants also allegedly tricked consumers into disclosing their credit and debit card information, and then enrolled them without authorization in a negative option program in which consumers accounts are continually charged.

Health Formulas LLC, doing business as Simple Pure Nutrition uses telemarketing, the Internet, print, radio, and television advertisements to pitch a variety of dietary supplements and other weight-loss, virility, muscle-building or skin cream products, according to the FTC's complaint.

It's the first FTC action alleging violations of the Restore Online Shoppers' Confidence Act (ROSCA), which bans marketers from charging consumers in an Internet transaction, unless the marketer has clearly disclosed all material terms of the transaction and obtained the consumers express informed consent.

The charge for Simple Pures weight-loss supplements, with names like Pure Green Coffee Bean Plus and RKG Extreme, ranges from $60 to $210 per month. Some consumers were sold additional products that cost between $7.95 and $60.

The FTC alleges that the defendants have no basis for the weight-loss claims they make about their products.

"The defendants behind Simple Pure used nearly every trick in the book to deceive consumers," said Jessica Rich, director of the FTCs Bureau of Consumer Protection. "They not only deceived consumers about the effectiveness of their products, but also repeatedly debited consumers accounts without their approval."

The FTC charges that the defendants failed to provide the disclosures required for a negative-option program, failed to provide a way for consumers to stop the automatic charges, and also failed to disclose material facts about their refund and cancellation policy.

The complaint charges the defendants with violating the FTC Act, the ROSCA and the FTCs Telemarketing Sales Rule. It also charges the defendants with violating the TSRs Do Not Call provisions by calling consumers who had asked them to stop calling. Finally, the complaint charges the defendants with violating the Electronic Funds Transfer Act by debiting consumers accounts on a recurring basis without their prior written authorization.

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